Blueprint for Recovery

By Michael J. Hogan

I believe that, in years to come, we shall look back upon this
undertaking as the dividing line between the old era of world
affairs and the new -- the dividing line between the old era of
national suspicion, economic hostility, and isolationism, and the
new era of mutual cooperation to increase the prosperity of
people throughout the world.

General Marshall will be known as one of those who brought this
new era into being. But he would be the first to agree that it is
more than the creation of statesmen. It comes from the minds and
hearts of all the people. Our peoples are united in their
determination to work together to deal with the basic problems of
human life.

-- Harry S Truman
President of the United States, 1945-1953

O
n June 5, 1947, U.S. Secretary of State George C. Marshall rose
to address the graduating class of Harvard University. Former
wartime chief of staff, the first career soldier to become
secretary of state, Marshall was a man of enormous personal
integrity whose selfless devotion to duty and hard-boiled honesty
made him one of the most respected global leaders of the day.

The young graduates must have been honored by the presence
of such a distinguished individual. Although famous men had stood
in Marshall's place before, his commanding public stature and the
significance of his pronouncement would mark this Harvard
commencement above all others. The secretary's address set the
stage for a massive American aid program to revitalize the
war-devastated economies of Europe. It would become the largest
such program in America's history and one widely regarded as the
most successful peacetime foreign policy launched by the United
States in this century.

British Foreign Secretary Ernest Bevin was among the many
Europeans to praise what came to be known as the Marshall Plan.
He called it "a lifeline to sinking men," a ray of hope where
none had existed before, an act of "generosity...beyond belief."

The Situation in Europe

A
lthough "V-E Day" brought the struggle against Nazi Germany to
an end, the peace still had to be won, and this required, above
all, the reconstruction of economic and political systems badly
damaged by World War II.

The Europeans strove mightily to mend the damage. But even
as Marshall spoke at Harvard, capital equipment remained
hopelessly obsolete or in need of wholesale repair. The depletion
of gold and dollar reserves made it difficult to import essential
items and use existing facilities efficiently. Food shortages and
inflation discouraged maximum efforts by a demoralized work
force; shortages of coal, steel, and other basic resources
further restrained production; and the severe winter of 1946-47,
the worst in modern memory, nearly wiped out earlier economic
gains. In 1947, Western Europe's agricultural production averaged
only 83 percent of its prewar volume, industrial production only
88 percent, and exports a bare 59 percent. Translated into human
terms, these figures added up to widespread fatigue and a
pervasive sense of pessimism about the future.

Making matters worse, the economic crisis worked like a
superheated crucible to inflame already serious political and
diplomatic problems. In France and Italy, worsening economic
conditions undermined governmental authority. In Britain, the
winter crisis and the drain on reserves triggered a decision to
withdraw British forces from Greece, a country racked by a bitter
civil conflict that compounded the economic dislocations growing
out of the war. The situation was the same in Germany. Economic
conditions there remained the worst in Western and Central
Europe, prompting the American occupation authorities to warn
that widespread poverty was fostering a popular discontent upon
which the Communists were capitalizing.

Policy-makers in Washington also worried about the situation
in Germany. They had rejected early postwar proposals, notably
the Morgenthau Plan, that would have prevented Germany from again
becoming a unified industrial state, urging instead that
reparations be held to a minimum and that a revitalized Germany
be reintegrated into the European community. There were many
reasons for the new policy. But of them, none was more important
than the conviction in Washington that stability across the
Continent depended on recovery in Germany, which had long been
the hub of the European economy.

The German problem exacerbated existing divisions between
the former Allies, particularly those between the United States
and the Soviet Union. According to wartime agreements, Germany
had been divided into American, British, French, and Soviet
occupation zones. The zones were to be treated as an economic
unit and were to give way to a central administration and then to
a new German government. Progress in this direction, however, had
foundered on the incompatible interests of the victorious powers.
They could not resolve their differences over the amount and form
of reparations or over the level of industry and the degree of
central administration to be accorded a united Germany. Nor could
they agree on arrangements for international control of the Ruhr,
where the great coal and steel industries constituted the basis
of Germany's economic and military might.

These and other differences came to a head at the foreign
ministers conference that convened in Moscow between January and
April 1947. The negotiators were unable to agree on the terms of
a German settlement. Secretary of State Marshall, who headed the
American delegation, left the conference convinced that Soviet
leaders hoped to gain politically from a deadlock that would
deepen the economic crisis in Central and Western Europe, pave
the way to victory for the Communist parties in France, Italy,
and Germany, and thereby open the door to an expansion of Soviet
influence in an area deemed vital to American security. "The
patient is sinking while the doctors deliberate," Marshall told a
radio audience shortly after his return from Moscow.

Origins of a Recovery Plan

It is an idea which translates the problem from one of individual
countries to one of a continent, and only a country that is a
continent could look at another continent in that way....When the
Marshall proposals were announced, I grabbed them with both
hands. I felt that it was the first chance we had ever been given
since the end of the war to look at [the] European economy as a
whole.

--Ernest Bevin
Foreign Secretary of Great Britain, 1945-1951

A
fter returning from Moscow, Marshall set the wheels of American
recovery planning in motion. He instructed the State Department's
Policy Planning Staff and other agencies to report on Europe's
need for economic assistance and on the conditions that should
govern American aid.

These reports were then combined with recommendations coming
from other quarters, notably from Under Secretary of State
William L. Clayton, to lay the foundation for the proposal that
Marshall would announce at Harvard University. In this and
subsequent pronouncements, Marshall and his colleagues urged the
Europeans to take the initiative and assume the responsibility
for drafting a program of economic recovery. The Americans would
provide "friendly aid" in the drafting process and financial
support for a workable program -- a regional program, not a
collection of disparate national schemes -- that was founded on
such principles as self-help, resource sharing, and German
reintegration.

This was the "lifeline" that the Europeans needed, and most
of them, as British Foreign Secretary Bevin recalled, "grabbed"
it "with both hands." Bevin and French Foreign Minister Georges
Bidault first met to discuss Marshall's proposal with Soviet
Foreign Minister Vyacheslav M. Molotov, who said that a regional
recovery program would violate national sovereignties. The
meeting broke down when Molotov refused to approve a program
organized on this basis, whereupon Bevin and Bidault convened a
second conference that opened in Paris on July 12, 1947. The
Soviets again declined to participate, and they prevented the
Poles and the Czechs from attending as well.

At the conference, the occupation authorities represented
the western zones of Germany. Joining them were the delegates of
16 European nations: Austria, Belgium, Denmark, France, Greece,
Great Britain, Iceland, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Sweden, Switzerland, and Turkey.

The conferees spent two months drafting a comprehensive
recovery plan that came close to what the Americans had in mind.
As modified by subsequent deliberations in Washington, this plan
became the basis for the European Recovery Program that President
Harry S Truman presented to Congress in December 1947 and that
Congress passed as the Economic Cooperation Act in the spring of
the following year. The act provided over $5,000 million for the
first 18 months of what eventually became a four-year program
that would cost the American people approximately $13,000 million
before it ended in 1952. This sum must seem trifling today, when
taxpayers shoulder government expenditures in excess of millions
upon millions of dollars, but it amounted to between 5 and 10
percent of the federal budget over the life of the recovery
program, or about 2 percent of the gross national product over
the same period. An aid program of equal proportions in 1997
would be worth many times the amount of the one that Truman
initially presented 50 years earlier.

The U.S. Domestic Debate

Churchill's words won the war,
Marshall's words won the peace.

--Dirk Stikker,
Foreign Minister of The Netherlands, 1948-1952

C
oming on top of the $9,000 million already expended on a variety
of postwar programs in aid of Europe, the Marshall Plan
appropriation was bound to raise objections in Congress. Senator
Robert A. Taft of Ohio led a group of economy-minded legislators
who were convinced that Marshall aid would aggravate existing
shortages in the United States. It would drive up the wholesale
price index, they argued, and end in new government controls over
the economy. These arguments had more than a passing appeal to a
population weary of wartime sacrifices, high taxes, government
controls, and items in short supply.

Nor did economic issues exhaust the list of objections. Taft
and his allies, who represented an older, isolationist tradition
in American diplomacy, also worried lest the Marshall Plan
entangle the United States in the affairs of Europe at a time
when tensions there could spark another world war.

These were serious reservations, but in the ensuing debate
supporters of the Marshall Plan organized a mighty offensive that
overturned the arguments mounted by their opponents.
Spokespersons for the Truman administration led the offensive,
testifying before congressional committees, speaking at public
meetings across the country, and organizing three presidential
commissions to explain how the United States could manage an
expensive foreign aid program without wrecking its economy. In
collaboration with their government counterparts, a variety of
private groups also threw their support behind the Marshall Plan.
These included the major trade unions, the leading farm
associations, and powerful elements in the business community, as
well as the Committee for the Marshall Plan, a nonpartisan group
composed of former government officials and representatives of
business, labor, and agriculture.

In public and private forums alike, the spokespersons for
these groups joined the Truman administration to defend the
Marshall Plan as an act of creative statesmanship, an instrument
of American as well as European interests. It would reverse the
economic deterioration in Europe, they said, put participating
countries on a self-supporting basis, and clear a path to the
multilateral system of world trade envisioned in the Bretton
Woods agreements of 1944.

Political and strategic arguments paralleled those of an
economic nature. The United States, these arguments ran, must
forsake the discredited policies of the past. Security against
aggression could not be found in the isolationism urged by Taft
but in a policy that put American aid behind beleaguered friends
on the Continent. Such a policy would reinvigorate fragile
political coalitions that were committed, like the United States,
to democratic forms of government and would reassemble the
components of a balance of power strong enough to contain the
Soviets. These were persuasive arguments, made even more
persuasive by Britain's withdrawal from Greece, by the labor
unrest in France, Germany, and Italy, and by the Communist coup
that toppled the democratic government of Czechoslovakia in
February 1948.

After four months of deliberation, the U.S. Congress passed
the Economic Cooperation Act in the spring of 1948. The vote in
the House of Representatives was 329 in favor and 74 opposed,
while that in the Senate was 69 in favor and 17 opposed --
margins that belied the intensity of the debate and the
inveterate opposition of the measure's critics. American
diplomacy would never be the same again.

Enlisting the Private Sector

T
o administer the Marshall Plan, Congress established the
Economic Cooperation Administration (ECA), complete with an
administrator in Washington, D.C., a special representative in
Paris, and local missions in each of the participating countries.
The ECA had complete control over operational matters and shared
with the U.S. Department of State responsibility for shaping
policy. Undergirding this organizational arrangement was the
assumption, widely held in Washington, that revitalizing
production, solving complicated trade and financial problems, and
managing the other tasks involved in Europe's recovery required a
technical and business acumen that the State Department did not
possess. It required a special administration staffed by the
"best brains" from the areas of business, labor, agriculture, and
the professions -- what Senator Arthur H. Vandenberg of Michigan
called a "business enterprise" led by men with "particularly
persuasive economic credentials."

These arguments convinced President Truman. He promptly
appointed Paul G. Hoffman, president of the Studebaker automotive
corporation, as the ECA's administrator in Washington, and W.
Averell Harriman, a prominent figure in the business and banking
communities, as the special representative in Paris. Harriman was
a former U.S. Ambassador to the Soviet Union, envoy to Great
Britain, and U.S. Secretary of Commerce, while Hoffman had served
on presidential and business advisory groups that backed the
Marshall Plan during the congressional debates of 1948.

Hoffman and Harriman filled their offices with top men from
the academic and corporate worlds. College graduates, especially
graduates of Harvard, Yale, Princeton, and other highly regarded
institutions, occupied virtually all high-level positions. The
list included such professionals as Milton Katz, a professor at
the Harvard Law School who became Harriman's general counsel in
Paris, and Richard M. Bissell, Jr., a Keynesian economist who
became assistant deputy administrator in Washington. Men with
corporate backgrounds were even more prominent, filling key
positions in Washington and Paris and serving as ECA mission
chiefs in most of the participating countries. The major farm
groups donated members to the private advisory committees
established by the ECA, worked closely with its overseas
missions, and helped to staff its food and agriculture divisions.
Much the same was true of the American Federation of Labor, the
Congress of Industrial Organizations, and the other trade unions.
In these and other ways, the ECA became the center of a vast
network of cooperation between public policy-makers and private
leaders, whose skills contributed immeasurably to an efficient
and bipartisan administration of the recovery program.

This administrative system did not stop at the water's edge.
In accordance with the principles of maximum self-help, mutual
aid, and shared responsibility, Marshall and other officials
insisted from the start that participating countries take the
initiative and play a major role in their own recovery. This
required a regional authority that could speak for Europe with a
single voice.

The participating countries met this requirement by
establishing the Organization for European Economic Cooperation
(OEEC). Headquartered in Paris, the OEEC worked in tandem with
the ECA to devise annual recovery plans, allocate American aid,
make currencies convertible, and loosen the restraints on
production and trade. The two agencies had their differences, of
course. But their cooperation never broke down, nor did their
dogged pursuit of European recovery.

The OEEC quickly assembled a distinguished staff in Paris,
arguably the most impressive assembly of economic and financial
talent anywhere in the world. Belgian Prime Minister Paul-Henri
Spaak, one of the great champions of Western European unity,
chaired the OEEC Council, which comprised national
representatives from each country. Robert Marjolin of France,
another advocate of European unification and a prime mover behind
the French Monnet Plan, headed the OEEC's international
secretariat. For the most part, equally impressive figures stood
in for government ministers at the head of their national
delegations, one of the most notable being Sir Edmund Hall-Patch
of Great Britain. A civil servant with experience in the British
Treasury and Foreign Office, Hall-Patch chaired the OEEC's
Executive Committee. The OEEC never became a truly supranational
authority of the sort that most Americans and many Europeans had
in mind. But under the leadership of able men, it proved to be an
effective instrument of economic cooperation with an increasingly
European identity and a burgeoning staff of international public
servants.

The network of cooperation stretched from the OEEC's
headquarters in Paris across the map of Western Europe, involving
at every level a pattern of power-sharing between public
officials and private leaders much like the one that took shape
around the ECA. Each of the participating governments established
its own recovery agency, many of which, like the central planning
commission in France, involved the active participation of
business, labor, and farm groups. The same groups established
links with the ECA's missions in the participating countries, as
well as with the OEEC. They also joined forces in the national
production centers and productivity teams that were established
with American support to improve industrial efficiency and
maximize output. Through these and similar initiatives, American
and European leaders mobilized a powerful alliance of private
groups behind the vision of a shared abundance that lay at the
heart of the Marshall Plan.

Partners in Reconstruction

Thanks to the Marshall Plan, the economy of the democratic part
of Europe was saved....The aims defined by General Marshall in
his Harvard speech were attained. The success was a striking
demonstration of the advantages of cooperation between the United
States and Europe, as well as among the countries of Europe
themselves.

-- Paul-Henri Spaak
Prime Minister of Belgium, 1947-1949

T
he Marshall Plan was fundamentally a joint enterprise. The major
American contribution took the form of primary products and
manufactured goods in short supply on the Continent or in the
overseas territories of the participating countries.

Approximately $12,000 million in Marshall Plan aid had been
expended by the middle of 1951, much of which helped member
states to finance essential imports of fuel ($1,567 million);
food, feed, and fertilizers ($3,430 million); and machines,
vehicles, and equipment ($1,853 million).

These imports combined with other forms of American
assistance to bring a high degree of economic progress and
stability to Western Europe. Inflation had been contained in most
of the participating countries by 1950, and both intra-European
and extra-European trade had recovered to levels well above those
anticipated at the start of the Marshall Plan. Shortages growing
out of the Korean War undercut these gains. But this was a
temporary reversal in an established pattern of recovery that
resumed in the early 1950s, continued unabated over the next
decade, and led to the restoration of European currency
convertibility and the formation of a multilateral trading system
comparable to the one envisioned at Bretton Woods.

Something similar can be said of the recovery of Western
European production. During the Marshall Plan period, Western
Europe's aggregate gross national product jumped by more than 32
percent, from $120,000 million to $159,000 million. Agricultural
production climbed 11 percent above the prewar level, and
industrial output increased by 40 percent against the same
benchmark.

The designers of the Marshall Plan cannot take all of the
credit for this remarkable record of success. Local resources
accounted for 80 to 90 percent of capital formation in the major
European economies during the first two years of the recovery
program. Compared to this effort at self-help, some might
conclude, the American contribution was marginal measured in
quantitative terms, and actually declined in the years after
1949. In truth, however, American aid and European effort were
linked inextricably. The Marshall Plan, as Paul Hoffman once
explained, provided the "critical margin" of support that made
European self-help possible. It facilitated essential imports,
eased production bottlenecks, encouraged higher rates of capital
formation, and helped to suppress inflation -- all of which led
to gains in productivity, to improvements in trade, and to an era
of social peace and prosperity more durable than any other in
modern European history.

The use of counterpart funds provides another example of how
the Marshall Plan worked as a shared enterprise. These funds
comprised the local currency equivalent of American grants, which
the Economic Cooperation Act required participating countries to
set aside in special accounts jointly controlled by the ECA and
the governments involved. Such an arrangement forced both sides
to negotiate their differences, which sometimes were
considerable, and to reach an agreement that made expenditures
possible. In Britain, counterpart funds were used to liquidate
the Bank of England's short-term public debt. In the Netherlands,
they helped to contain inflation, underwrite a program of land
reclamation, and provide low-cost housing for industrial workers.
In France, they supported the Monnet Plan for industrial
modernization and re-equipment. In Italy, they were earmarked for
a variety of industrial and agricultural projects and for a
public-works program to absorb part of the large pool of
unemployed labor.

All across Europe, the landmarks of this joint enterprise
still stand. In Berlin, Marshall aid reconstructed a power
station that had earlier been dismantled as reparations. In
Austria, it played a part in building the Limberg Dam and other
components in a vast hydroelectric project. In Greece, it helped
to reopen the Corinth Canal and restore the famous Orient
Express, which once again linked Greece to Western Europe. And in
other participating countries, it went to upgrade the
manufacturing, mining, transportation, and communications
industries. Some of the most notable projects included the Usinor
steel mills and the Genissiat hydroelectric project in France,
the Finsider and Falck steel plants in Italy, the Margram rolling
mill in Great Britain, and the Donawitz and Linz steel mills in
Austria.

The Path to Prosperity

This magnanimous support [the Marshall Plan] deserves above all
to be assessed from the point of view of its moral effect. It
gave the German people the feeling that they were no longer
written off by the rest of the world but that they also could
again take part in the progress of the free world. Its economic
and financial significance was, moreover, no less.

T
he spirit of cooperation evidenced in the execution of the
Marshall Plan was born of more than need. Americans and Europeans
were linked by a system of shared values. In the 20th century, a
commitment to productivity formed part of the common culture, and
one particularly important to a program of economic recovery. A
lineal descendant of the Enlightenment, with its faith in reason,
its commitment to science, and its belief in progress, the idea
of productivity found fruitful expression in the technical
assistance program that the ECA established in 1948. The goal was
to promote industrial efficiency in Europe. The vehicles for
achieving this goal included a variety of technical assistance
projects, engineering schemes, and productivity surveys launched
in Europe with the aid of American experts, and a host of
productivity teams of European workers and managers who came to
the United States to study agricultural and industrial production
methods. Out of these efforts, all believed, would come a new day
of economic progress and social stability in Europe.

By the middle of 1951, the ECA had expended nearly $30
million on a dazzling array of technical assistance projects. In
addition to projects that aimed at increasing efficiency and
raising productivity in industry and agriculture, the list
included a plan to expand electric power facilities in Greece, a
program of veterinary research in Britain, and a number of
schemes to improve public administration in Italy, Greece, and
other participating countries.

By that time, moreover, hundreds of European productivity
teams had toured the United States and scores of American experts
had traveled to the participating countries and their overseas
territories. The ECA maintained 372 experts overseas in the
second quarter of 1951 alone and sponsored 145 productivity teams
involving more than 1,000 European labor, management, and
agricultural representatives. In addition, the ECA used technical
assistance funds to conduct seminars for European managers, to
sponsor training programs for European engineers, and to
distribute technical and scientific information through films,
literature, and exhibits.

As in other areas, the Europeans cooperated in these
projects and made a contribution of their own. Labor and
management leaders from Great Britain and the United States
organized the Anglo-American Council on Productivity. Founded in
1948, the council's activities paralleled the ECA's technical
assistance program, with the goal being to enlist American
technology in the cause of British productivity. By the end of
1951, the council had sponsored visits to the United States by 66
British productivity teams, disseminated over 500,000 copies of
their reports, and published major studies on standardization and
simplification in industry.

Other participating countries followed this example. They
organized national production councils and worked through the
OEEC to launch an intra-European technical assistance program
under which national groups of cooperating labor, management, and
professional leaders began exchanging technical information and
production data. The whole process, as a Dutch manufacturer said
of the technical assistance program, opened the door to a
"promising and fertile dissemination of American experience in
handling productivity problems."

The results of this dissemination are impossible to
estimate, but neither the ECA nor the participating countries
doubted that technical assistance added measurably to Europe's
economic revival. In France, technical assistance enhanced the
Monnet Plan for industrial redevelopment. In Germany, it
accelerated earlier trends toward the rationalization of
industry. In other countries, it led to improved engineering and
marketing methods, to important technological adaptations, and to
the spread of industrial planning, the growth of automation, and
the better organization of production -- all of which contributed
substantially to the high rate of European productivity that
persisted through the 1950s.

The integration of the Western European economies also looms
as one of the great achievements of the postwar era and one for
which the Marshall Plan can take a due share of credit. The
architects of the Marshall Plan celebrated the benefits of
economic integration and did what they could to bring it about.
The strategic assumptions behind their policy held that an
integrated economic order, particularly one headed by central
institutions, would help to channel the revitalized strength of
the Federal Republic of Germany in a constructive way. Economic
integration would reconcile West Germany's recovery with the
security concerns of her neighbors, thereby creating a unit of
power in the West sufficient to contain Soviet power in the East.
The economic assumptions grew fundamentally out of the American
experience at home, where a large internal economy integrated by
natural market forces and federal institutions had helped to make
possible the gains in specialization, resource utilization, and
productivity that inhere in economies of scale.

With these goals in mind, the designers of the Marshall Plan
tried to strengthen the OEEC and liberalize intra-European trade,
so that coordinated planning and normal market forces could weld
separate economies into a single productive unit. They also
encouraged the Council of Europe and helped to found the European
Payments Union, forerunner of the European Monetary System. In
addition, they threw their weight behind the Schuman Plan
(proposed in 1950) and the coal and steel community that grew out
of it, just as they would support the larger European Economic
Community that followed.

The Birth of New Europe

The noble initiative of the Government of the United States is
for our peoples an appeal which we cannot ignore without
betraying them.

Together, then, we will make, and make it quickly, the effort of
mutual self-aid which will make us worthy of being aided.

For generations, men of all countries who rejected a selfish
nationalism have longed for this assembly which is being held
today. Let us be proud to be witness to it and to be the good
craftsmen of a task dreamed of for centuries and, at the present
time, urgently necessary.

T
he Europeans were less enamored than the Americans with the
integrative powers of the market. The British government rejected
integration altogether, and the other participating governments
refused to go as far in this direction as the Americans wanted.
Nor did the Marshall Plan preclude the British from pursuing
socialist policies, the French from adopting a modernization
scheme that assigned the state a greater role than the Americans
thought desirable, or the Germans and Italians from following
fiscal and monetary strategies at odds with those favored in the
ECA. American policy succeeded in large part because it
encouraged participating countries to exercise a high degree of
autonomy within the framework of the Marshall Plan. Although an
American plan, it placed a premium on European self-help and did
not break down when the Europeans devised plans and programs of
their own.

There were differences, to be sure, but they were always
overshadowed by the common vision that bonded the American
Marshall Planners to their friends and allies on the other side
of the Atlantic. Together, they saw a new Europe emerging from
the rubble and the ruin of war with restored life and fresh
vitality. And who can say that they did not go a long way toward
turning the dream into reality? Viewed against the pattern of
bilateralism that existed in 1947 or from the perspective of the
Treaty of Rome concluded a decade later, it seems clear that
recovery planners helped to set Western Europe on a road that led
from the economic autarchy of the 1930s to the Common Market of
the 1960s.

Nor was this the only gain. Through the OEEC and the Council
of Europe, through the European Payments Union and the Schuman
Plan, this generation of American and European policy-makers also
created an institutional framework that stood in lieu of a final
peace settlement in the West. It was this framework that set the
stage for a historic rapprochement between ancient enemies and
led to West Germany's reintegration into the North Atlantic
community.

The Marshall Plan, as defined by Marshall in his historic
commencement address, was "directed...against hunger, poverty,
desperation, and chaos." Measured against this criteria, it must
be judged a great success. It succeeded in the revival of
economic growth, the containment of Soviet expansion, and the
stabilization of democratic politics. It also laid a hardy
foundation for transatlantic cooperation on a myriad of economic
and political issues -- and for an Atlantic community that
remains vital and growing today.

Lessons Learned

The Marshall Plan consisted essentially in vast-scale American
aid to Europe. Its success depended entirely on the use the
Europeans made of that aid. Driven by a will to renew, as well as
by strong pressure from the Americans, they were able to put it
to good use -- that is, they concentrated their efforts on
investment and exports, with only limited satisfaction of
consumer wants, just enough to prevent social tensions from
reaching the breaking point or, at any rate, from causing an
acute crisis.

-- Robert Marjolin
Secretary-General,
Organziation for European Economic Co-Operation, 1948-1955

I
n the 50 years since George C. Marshall addressed the Harvard
class of 1947, it has become commonplace to hear government
leaders proclaim the need for another Marshall Plan -- to solve
the intractable problem of economic development in the so-called
Third World, to salvage what remains of the former Soviet Union,
to forge a permanent peace in the Middle East, to shore up the
unstable regimes in Eastern Europe, or to solve other difficult
problems. Although the Marshall Plan was bound by historical
circumstances that cannot be duplicated, it nonetheless lives on
as a compelling symbol of international cooperation. Its results
also testify to the resolve and generosity of the American
people, to their capacity for disciplined sacrifice, to the
transformative power of their leadership, to their talent for
organized initiative on a grand scale, and to their ability to
collaborate with others in the pursuit of common goals.

But the Marshall Plan has more than symbolic value. It also
offers some practical guides to the current and future
generations, even at a time when America's power has diminished
relative to its postwar pinnacle and when the American government
is no longer able to mobilize economic resources on a scale
comparable to those behind the Marshall Plan. After all, much of
what the Marshall Plan accomplished came at little cost to the
American taxpayer. The technical assistance program, which
absorbed only a fraction of American aid, nonetheless put
American technical, engineering, manufacturing, and marketing
know-how behind the revitalization of the European economies.
Similar programs could bring comparable benefits to the
developing world today, and their prospects for success would
only increase if they embodied the same spirit of cooperation
that infused so much of the Marshall Plan.

Virtually every part of the Marshall Plan stressed the
principle of European self-help and involved Europeans and
Americans as partners in the job of reconstruction. Nor was
cooperation limited to political leaders and government
officials. It was part of the genius of the Marshall Plan that
cooperation at the government level went hand-in-hand with a
private, trans-European and transatlantic pattern of
collaboration that involved leaders from business, labor,
agriculture, and the academy. This kind of cooperation not only
undergirded the recovery program in Europe, but also accounted
for its success in the United States, where the same combination
of private groups helped to educate the American people to the
need for European stabilization and won support for the Marshall
Plan on Capitol Hill.

The Marshall Plan institutionalized that cooperation in
innovative organizations that guaranteed the success of the
enterprise and could well be emulated today. Though a government
creation, the Economic Cooperation Administration functioned as a
semiprivate agency staffed by experts drawn from the professions,
just as the Organization for European Economic Cooperation,
itself an invention of the participating governments, functioned
in part as a denationalized agency run by a professional staff of
international civil servants who enjoyed an important degree of
autonomy from national governments. Similar thinking informed the
European Payments Union, not to mention the European Coal and
Steel Community that American and European leaders saw as a
supranational mechanism for integrating and regulating competing
European economies. These institutions and their successors stand
not only as part of the Marshall Plan's legacy but also as
examples of an international leadership that can dampen the
forces of nationalism, harmonize differences, and produce
positive results today, as they did in the early years of the
postwar period.

An even more useful legacy is to be found in the high degree
of tolerance that characterized American policy under the
Marshall Plan. To be sure, the Marshall Plan had no room for the
Communist political parties in Europe or for the
Communist-dominated trade unions. Nor did the plan leave room for
active
participation by the Soviet Union. Cooperation was limited
largely to the countries of Central and Western Europe and to
democratic or anti-Communist political forces. Within these
limits, however, the American Marshall Planners were capable of
working with their European partners in a way that stopped short
of dictating terms. Try as they might to push Great Britain into
an integrated Western European economy, the Marshall Planners had
to pull back when the British refused to go along, just as they
had to give way when the French, German, or Italian governments
refused to dismantle cartels, revise tax policies, implement
progressive social reforms, or take some of the other initiatives
urged by the ECA. As important as these goals were to American
leaders, they did not justify a hard-headed intervention into
European affairs. Nor would American leaders permit the wrangling
over these initiatives to disrupt the spirit of cooperation that
otherwise characterized the Marshall Plan, and especially the
collaborative efforts to realize such important common goals as
the liberalization of European trade, the conversion of European
currencies, the integration of markets, the building of
supranational institutions, the reconciliation of Franco-German
differences, and the creation of a continental balance of power
that could contain the Soviet Union.

The Marshall Plan may have created a postwar order in
Western Europe and the transatlantic area favorable to American
interests, but it was a collaborative order that involved the
Europeans as full partners and that gave them the greatest voice
in their own affairs. More than anything else, it was this spirit
of collaboration and tolerance, this emphasis on self-help and
mutual aid, that accounted for the success of the Marshall Plan
and that stands as a great lesson to the current generation.

The material assistance and the moral encouragement provided by
the Marshall Plan brought a powerful new impetus to the campaign
for European unity. In fact, it can be said that the American
policy of economic aid, coupled with the pressure of the
Communist danger, created conditions in which, for the first
time, the unification of Europe became a practical possibility.

-- The Council of Europe, 1949

About the Author

M
ichael J. Hogan is professor of history and chair of the
Department of History at The Ohio State University, as well as
editor of Diplomatic History, an international journal for
specialists in diplomacy and foreign affairs. His books include
Informal Entente: The Private Structure of Cooperation in
Anglo-American Economic Diplomacy, 1918-1928; The Marshall Plan:
America, Britain, and the Reconstruction of Western
Europe, 1947-1952; The End of the Cold War: Its Meaning and
Implications; and Hiroshima in History and Memory. He
has
received the Stuart L. Bernath Lecture and Book Prizes of the
Society for Historians of American Foreign Relations, the Quincy
Wright Book Prize of the International Studies Association, and
the George Louis Beer Prize of the American Historical
Association. Professor Hogan is currently completing a book on
President Harry S Truman and the origins of the national security
state.